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Foreign Reserves to Rise on $2.5b Eurobond Issuance

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  • Foreign Reserves to Rising on $2.5b Eurobond Issuance

Nigeria’s 42.8 billion external reserves will go up, with the successful issuance of the $2.5 billion Eurobond offer, a report said at the weekend.

Besides, cumulative transactions in the Investors’ & Exporters’ (I&E) forex window have hit $20 billion, said one of the reports on the economy released by two investment and research firms at the weekend.

They said Nigeria is showing signs of recovery after a difficult economic period that followed historically low oil prices, a currency devaluation, and high inflation.

Afrinvest West Africa Limited’s report said the $2.5 billion Eurobond cash raised by the Federal Government to refinance maturing short term local debt securities will push foreign reserves to new heights. “We expect further accretion to external reserves currently at a 48-month high of $42.8 billion with positive feedback on the Central Bank of Nigeria’s (CBN’s) ability to sustain foreign exchange intervention sales,” it said.

External reserve was $40.4 billion last December. The last time the foreign reserves hit the $40 billion mark was January 2014, about five months before the crash in global oil prices. In September 2008, the country’s foreign exchange reserves hit $62 billion, with the Federal Government spending $12 billion from it to settle external debts.

The report said that despite downside risks of volatility in the oil market and political uncertainty, the short term positive outlook on forex market stability and liquidity remains intact.

Another report from Exotic Capital titled: ‘Fragile Recovery, Positive Outlook’, also released at the weekend, said that Nigeria’s forex regime, although still far from ideal, had begun to stabilise.

“A multiple currency regime evolved after the oil price fall in 2014 and the June 2016 devaluation, which led to a widening divergence between the official and parallel markets (the parallel market premium reached 100 per cent in January 2017). The current regime has shown a vast improvement this year with introduction of the I&E Forex window last April,” it said.

It said the parallel rate for naira is in the N360 to N365 range, nearly identical to the I&E Forex window rate used for international investors as well as importers and exporters, and has seen close to $20 billion in cumulative transactions since its introduction.

The Exotic Capital report said that despite the relative successes of the I&E Forex window, the current forex regime of multiple windows has hurt, and will continue to hurt, the economy over the medium term. “Not only does it create economic distortions (leading to market inefficiencies and dead-weight loss), it also builds mistrust among market participants who fear that competitors were able to access forex at different rates, doing little to create transparency and move the economy forward,” it said.

“Furthermore, we suspect that long-term domestic investment has been hampered as uncertainty looms not only over the future value of the currency but also over the regime. Nevertheless, we do not expect the CBN to make any major forex adjustments ahead of the 2019 presidential election unless oil prices / production falls again (as that would hinder its ability to supply forex to meet demand),” the report added.

It doubted the possibility of the CBN adopting market-determined rate (free float), but “as an interim approach, it could consider unifying its multiple rates around the I&E Forex window rate, which we think would help it to attract more portfolio and direct investment, as well as mitigating some of the previously-discussed issues”, the report.

Market data showed that CBN last week continued its weekly forex interventions, injecting $100 million on Monday via wholesale SMIS intervention.

A total of $55 million was auctioned at the Small and Medium Enterprises (SMEs) segment while $55 million was sold to satisfy retail invisible demand (Tuition fee, medical payments and Business Travel Allowance).

The forex rates traded within a tight band at all segments of the market with the CBN official spot rate trading flat all week after initial five kobo depreciation on Monday to N305.90/$1.00.C

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

Economy

FG Plans to Build 10 New Airports in Anambra, Benue, Others – Aviation Minister

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Buhari in Port Harcourt

Aviation Minister Says FG Working on Building 10 New Airports

The Minister of Aviation, Hadi Sirika, on Tuesday, said the Federal Government plans to build 10 airports across the country to improve civil aviation.

The minister made the statement while defending his ministry’s 2021 budget proposals.

Sirika said President Muhammadu Buhari has done justice to the aviation ministry through the ongoing framework and implementation.

He said the administration would construct new airports in Anambra, Benue, Ekiti, Nasarawa, Ebonyi and Gombe States.

He further stated that airports in Kebbi, Osubi and Dutse have been taken over for redevelopment by the Federal Government.

Sirika said, “Consequent upon that roadmap, we have seen aviation grow in 2018 to become the second-fastest-growing sector of the economy.

“Also and by 2019, it became the fastest-growing sector of the economy and increased its GDP contribution.

“From 2015 till now, we’ve seen a lot of growth in civil aviation, the number of airports is increasing.

“So far, about seven airports have been added to the map, some of them completed, some of them under construction.

“There are airports coming up in Benue, Ebonyi, Ekiti, Lafia, Damaturu, Anambra and so on.

“All these show that civil aviation is growing during this administration.

“So, we have about 10 new airports coming up, that is almost half the number of airports we used to have in Nigeria.

“We are adding 50 per cent of the number of airports,” the minister added.

Sirika noted that Nigeria Air, the proposed national carrier, was part of the new roadmap and could be delivered before 2023.

He said, “We are on it. The transaction adviser has brought in the outline business case.

“It is being reviewed by Infrastructure Concession Regulatory Commission, Soon after it finishes, it will go to the Federal Executive Council and it will be approved.

“We will not leave this government without having it in place.”

He defended why Lokoja, Kogi State needs another airport, saying it is an alternative to the Nnamdi Azikiwe International Airport in Abuja.

He said, “Lokoja is an important northern town. It is a cosmopolitan town, it’s a mini Nigeria and it is extremely very important in growth and development of our country.

“We have a lot of agricultural activities there. There is fishery, there is perishable item production and so on.

“So, establishing an airport there is quite apt. For me, it is something we should have done long ago for its importance.”

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Economy

FG Says Over N6 Billion Disbursed to Poor Households in Zamfara

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Over N6 Billion Disbursed to Poor Households in Zamfara

The Federal Government said it has disbursed over N6 billion under the Conditional Cash Transfer (CCT) scheme to poor households in six out of the 14 local governments in Zamfara in 2020.

The Minister of Humanitarian Affairs, Disaster Management and Social Development, Hajiya Sadiya Umar-Farouk disclosed this on Tuesday during the flag off of Grant for Rural Women Project in Gusau.

The minister said the CCT program was created in 2016 to address the deficiencies in capacity and lack of investment in human capital of poor and vulnerable households.

The programme is designed to deliver timely and accessible cash transfers to beneficiary households.

“And sets to support development objectives and priorities, to achieve improvement in health and nutrition, school enrolment and retention, environmental sanitation and empowerment among others,” she explained.

Umar-Faruk said a total of 130,000 beneficiaries from Anka, Bungudu, Birnin Magaji, Kaura Namoda, Tsafe, and Talata Mafara local government areas received between N30,000 to N80,000, depending on the dates the beneficiary enrolled in the programme.

Speaking on the grant for Rural Women, the minister said the programme was introduced to deepen the social inclusion agenda of President Buhari administration that includes lifting 100 million Nigerians out of poverty in 10 years.

It is designed to provide a one-off grant to some of the poorest and most vulnerable women in rural Nigeria.

“A grant of N20,000 will be disbursed to over 150,000 poor rural women across the 36 states of the federation,” she said.

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Economy

Delta State Gov Okowa Presents N378.48 Billion Budget for 2021

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Ifeanyi Okowa Presents N378.48 Billion Proposed Budget for 2021

The Executive Governor of Delta State, Senator (Dr) Ifeanyi Okowa, on Tuesday presented a N378.48 billion budget to the state’s House of Assembly for consideration for the 2021 fiscal year.

The budget christened “Budget of Recovery” appropriated N207.52 billion for Capital Expenditure while Recurrent Expenditure was allocated N171.32 billion.

According to the Governor, capital expenditure accounted for 54.76 percent of the budget while 45.24 percent represented recurrent expenditure.

He explained that the allocations were in line with his administration’s agenda of spending more on projects and programmes that would impact positively on the socio-economic well-being of the people of Delta.

The proposed budget for 2021 is N96.2 billion or 34.05 per cent more than the N282 billion approved for 2020.

The governor said that the 2021 budget proposals reinforced the state government’s commitment to road infrastructure, education, health, job and wealth creation programmes as the principal-drivers of the Stronger Delta agenda.

According to him, N113 billion, representing 89.94 per cent of the capital budget is allocated to the economic sector while N35 billion is allocated to the social sector; the administration sector got 10.93 billion and the regional sector, N42 billion.

“In 2021, we propose to spend N66.66 billion on Road Infrastructure; N6.79 billion on Health; Education will gulp N23.55 billion; Agriculture, N2.04 billion and Water Sector, N1.83 billion.

“Job and Wealth Creation Bureau will gulp N1 Billion and Youth Development, N1.25 billion. These key sectors are very essential in our 2021 budget,” Okowa said.

Okowa also explained that due to the negative impact of COVID-19 on the economy and the world at large, government spending was significantly affected by the global pandemic and that Delta was no exception.

The governor, therefore, stated that “the proposed 2021 Budget for Delta is primarily focused on protecting and supporting our people in a COVID-19 environment, accelerating infrastructural renewal, incentivizing growth, enhancing job creation, engendering social inclusion and developing sustainably.

“Overall, the proposed 2021 Budget is predicated on inclusive economic growth that is sustainable and people-centred, with strengthening fiscal sustainability through increased efficiency in spending, improved revenue mobilization and debt sustainability.

“It also entails improving processes and systems in Public Financial Management, and Monitoring and Evaluation, to bolster better public sector service delivery.”

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